Wells Fargo reported its third-quarter 2008 earnings today, and showed with silky smooth pathology that as an accomplished liar it was among the best. And as the very best of them do the bank didn’t lie so much as it meant the truth into any even more desirable result. For an insolvent bank reporting earnings and the mother of all credit crunch the name of the game is beat expectations, those expectations which the bank provides of course.

Wells Fargo & Company is following Jamie Dimon’s lead this morning with better results than other banks. The only “AAA” rated bank posted $0.49 EPS vs. $0.41 estimates. Revenues were $10.38 billion versus $10.96 billion estimates. It is also still growing if you can believe it in this environment.

The only AAA rated bank pays a flat broke been scheduled to get $25 billion from the working stiffs and another $20 billion from its own capital raising.

Wells Fargo said Wednesday it will move forward on its plans to raise $20 billion to help pay for its purchase of Wachovia

“The combination of the market capital and the capital investment from the government will enable us to finance the Wachovia acquisition, to continue to build our franchise and gain market share as we have done throughout the credit crunch,” Atkins said.

But Wells Fargo is probably eager to demonstrate that it can raise the $20 billion on Wall Street and return the government’s $25 billion investment as soon as possible.

That’s the ticket acquisitions of ailing banks and increasing share of a decreasing market will carry you through the credit crunch, that’s a new one John. Oh by the way Wall and Main Street are probably eager to see the bank generate a profit, that will carry you through the credit crunch; do you think you could swing it for us John?

The bank wrote down nearly $2 billion for the quarter and put loss provisions at $2.5 billion, saw a $1 billion increase in non-performing loans in the third quarter compared then decreased loan-loss reserves by $500 million. Since loan loss reserves come from profits i.e. the bottom line, that’s where the $500 million went.

Wells Fargo, despite booking a near $1 billion increase in non-performing loans in the third quarter compared to the previous three-month period, cut its loan-loss reserve by $500 million.

The slick accounting moves, while perfectly legal, gave a false impression of just how strong Wells Fargo’s balance sheet actually was, the analysts said in separate interviews and reports last week.

“Wells Fargo are pretenders,” said a trader at one top hedge fund, who spoke on condition of anonymity because he is afraid of trouble from the Securities and Exchange Commission, in light of the regulatory body’s recent threat to prosecute short sellers.

It should be Wells Fargo who fears prosecution, but this is where we are in today’s markets.

The trader said trimming the loan-loss reserves had the effect of boosting profits, which in turn boosted its share price, which in turn made it easier for the bank to successfully move forward with a move it announced this week to raise $20 billion of capital.

Revenue was $10.38 billion, up 5% from $9.85 billion a year ago. The write-downs for investments in Fannie Mae, Freddie Mac and Lehman Brothers reduced revenue by 7 percentage points, the company said.

We wonder why he didn’t just say $726.6 million, but OK we’ll do it for you John. In addition we’ll say that Q3 net charge-offs, the cost of uncollectible loans, hit nearly $2 billion vs $892 million last year.

Third quarter 2008 net charge-offs were $1,995 million (1.96 percent of average loans, annualized) compared with $1,512 million (1.55 percent) in second quarter 2008 and $892 million (1.01 percent) in third quarter 2007. A significant part of the sequential increase reflected the changes in the National Home Equity Group (Home Equity) charge-off policy in the second quarter, which deferred an estimated $265 million of charge-offs. After taking into account the impact of the new Home Equity policy, charge-offs rose at a more moderate pace in third quarter than in the last few quarters. Third quarter 2008 provision was $2.5 billion, including a $500 million credit reserve build primarily related to higher projected losses in several consumer credit businesses, as well as growth in the wholesale portfolios, bringing the allowance for credit losses to $8.0 billion, double its level from just before the credit crunch began a year ago.

See when all the smoke get blown away from bull sh!t accounting principles and fancy CEO suit double talk about market share through the credit crunch, what remains is the 8 billion big ones in the allowance for credit losses, you remember the number that doubled from a year ago, and you don’t have to think to hard about what the 8 large are there for.